First Home Guarantee Scheme - Big Changes Effective 1 Oct 2025 

Written By Sally Chen

There's huge news for first home buyers with the proposed changes to the First Home Guarantee Scheme and Labor’s recent announcement to fast track the start date of these changes to 1 October 2025.

In short: if you have a 5% deposit, from 1 October 2025, you can apply for the FHGS regardless of your income and with Perth property price caps increasing from $600,000 to $850,000. No LMI will apply. If you are interested and eligible, now is the time to get ready!

More details below.

All Australian first-home buyers with a 5% deposit are eligible for the First Home Guarantee Scheme (FHGS), an Australian Federal Government initiative designed to help more people buy a home sooner.  The government acts as a guarantor for part of your loan, meaning no LMI (even with a 5% deposit) and you save thousands.

How the Scheme Works Now

Currently there are only 50,000 places per year:

  • 35,000 for First Home Guarantee

  • 10,000 for Regional First Home Buyer Guarantee

  • 5,000 for Family Home Guarantee

Eligibility criteria includes:

  • Income cap of $125k for singles or $200k for couples income combined

  • Minimum 5% deposit saved

  • Must live in the property (no investment properties)

  • First home buyers or those who haven’t owned in the last 10 years

  • Property price caps of $600,000 (WA Capital city) or $450,000 (WA other) apply

 

What’s Changing from 1 October 2025

The Albanese government has announced major updates:

  • No income limits – all first home buyers will be eligible regardless of income

  • No placement limits – no cap on the number of spots available

  • Higher property caps increasing to $850,000 (WA Capital city) or $600,000 (WA other) apply

The 5% deposit without LMI has remained the same from 1 October. With the above changes, this means more Australians than ever will be able to buy a home sooner, without the pressure of saving a huge deposit or worrying about income restrictions.

According to Labor, with these new changes, you will be able to purchase a home priced at $844,000 with a $42,000 deposit, shaving eight years off the time it takes to save for a deposit, and saving up to $34,000 in lender’s mortgage insurance.

Labor has fast-tracked the start date of these changes to 1 October 2025, instead of 1 January 2026, meaning if you are interested in applying for this scheme, now is the time to get prepared and start the conversation with your mortgage broker.

 

What This Means for You

Whether you’re looking to buy now or planning ahead, now is the best time to get ready.

If you’d like to understand how the Home Guarantee Scheme could work for you, book a chat with our team today.

Or if you know a first home buyer in your circle of family and friends, forward this newsletter to them to help them get prepared for 1 October 2025!

Sally Chen
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